Most utility payments will not appear on your credit report and will not affect your credit. Some services are available that will report utility bill payments, but some only report to one credit agency, and others charge a fee.

Does Paying Utilities Build Credit?

Paying utilities will only build credit if the payments are reported to the three major credit reporting bureaus: Experian, Equifax, and TransUnion. Most utility companies do not report payments.

Everything in your credit report is reported by your creditors. Creditors pay to report records, and if they report they are subject to regulation under the Fair Credit Reporting Act (FCRA).

Most utility companies don’t want the cost or the regulations that go with reporting. As a result, they don’t report your payments, so those payments will not build good credit.

Missing utility payments can hurt your credit. Your utility provider won’t report missed payments, but they may sell your account to a debt collector. The collector will report a collection account, which can then do serious damage to your credit.

What Bills Affect My Credit Score?

Only payments that are reported to the three major credit bureaus will affect your credit. These bills usually involve loans, like a student loan, personal loan, car loan, or revolving credit accounts, such as a credit card.

Bills that are not reported to a credit reporting agency, like rent and utility payments, will not affect your credit score unless your account is delinquent and gets sent to collections. 

There are ways to place some payments on your credit report. Some lenders also consider data other than your credit score in lending decisions, and this may include rent or utility payments.

How Do Utility Bill Payments Affect My Credit Scores?

If you simply make your utility payments on time, they will not affect your credit score. If you miss payments, your FICO score could be harmed.

There are several ways to place utility payments on your credit report:

• Sign up for Experian Boost. This free service will place your utility payments on your Experian credit report.
• Sign up for eCredable Lift. This is another free service that will place your utility payments on your TransUnion credit report.
• Use a private reporting service. Services like ExtraCredit and LevelCredit will report utility and rent payments to the major credit bureaus. You will have to pay for this service. You may have to make automatic bill payments from your bank account.
• Use a credit card. Paying your utility bills with a credit card will place them on your credit record, though it won’t be a separate tradeline. Some utilities may not accept a credit card payment or may charge a convenience fee.

Any of these methods will place your utility payments on your credit record. If your credit record is thin or if you have no score yet, you may see a significant boost. If you have an extensive record, the difference may not be noticeable.

How Do Utility and Phone Bills Appear On My Credit Reports?

If you use a reporting service to place utility or phone payments on your credit report the entries will appear in the “accounts or “tradelines” section of your credit report. Each credit bureau formats its report in its own way, so you’ll need to check your credit reports to confirm the way the account is presented.

Your account may not appear on all three credit reports. This will depend on the reporting service you use. Experian Boost will only appear on your Experian credit report and eCredable Lift will only appear on your TransUnion credit report.

Other Ways to Build Credit

If you’re looking for ways to build credit, look beyond utility bills. Reporting utility payments may help, but you may also be able to find more effective ways to improve your credit score.

Start by checking your credit reports. Errors or identity theft could drag your score down.

Use Credit Strong

A credit builder loan from CreditStrong is an accessible and effective way of building credit. The money you borrow goes into a locked account. You then make small monthly payments, and when the sum is paid off, it’s released to you, minus the interest.

Because these loans involve very little risk to the lender, they are available to people with bad credit or no credit. The low payments make it easy to keep on schedule and build a good payment history. That combination makes Credit Strong a great first step to building credit.

Credit Strong places an installment loan on your credit file, so it’s a great complement to a secured credit card or other revolving credit accounts. If you’re looking for credit-building options, check out CreditStrong today!

Apply For a Secured Credit Card

A secured credit card is a top choice for anyone looking for ways to build credit. You’ll put down a security deposit, and that deposit will become your credit limit. 

After that, the card works just like any other credit card. You can make purchases and even get cash advances up to your credit limit. The credit card company reports your payments.

Your deposit removes much of the card issuer’s risk, so it’s usually easy to get approved. Many banks and credit unions offer secured credit cards.

Some secured cards are available with poor credit and some have no credit check. The easiest cards to get often have an annual fee, which you’ll want to avoid if possible.

A secured credit card places a revolving credit account on your record. If you make your payments on time, you’ll build a good credit score. If you miss payments, you will hurt your credit rating. If you carry a balance from month to month, you will incur significant interest expenses.

Unless you make a large deposit, you will have a low credit limit. You’ll have to watch your credit utilization – the percentage of your available credit limit that you use – carefully. Try to keep your balance below 30% of your limit.

A student credit card or store credit card can also help you build credit.

Pay Off Existing Debt

If you’re carrying credit card debt, paying it off can boost your credit and save you a substantial amount of money on interest payments.

Credit utilization is an important factor in calculating your credit score. High credit card balances usually mean high credit utilization. They also increase your debt-to-income ratio, which is not part of your credit score but is an important factor in qualifying for many loans.

If you’re paying off installment loans, your best bet will usually be to keep paying the loan on schedule. 

Make On-Time Payments Each Month

Payment history is the single most important factor in computing your credit score. Every time you make an on-time payment, you build a good payment history. Every time you make a late payment, you hurt your credit history.

If you have to make a late payment on a monthly bill, call your creditor and explain why. Many creditors will refrain from reporting a late payment if you touch base with them and ask them not to report, especially if you have established a good payment history to that point.

Conclusion

Utility payments that are on time will not normally appear on your credit report or help you build good credit. Late payments can hurt your credit if the utility provider sends your account to collections. 

There are ways to place utility payments on your credit reports. Some are free but only report to one credit reporting company. For example, Experian Boost will only place payments on your Experian credit report. 

If you want payments reported to all three credit bureaus, you will have to pay for it. 

There are other ways to build credit, and you’ll have to decide whether the cost of reporting utility payments is worth the gain. You may be better off with a different credit-building method.

CreditStrong helps improve your credit and can positively impact the factors that determine 90% of your FICO score.

Start Building credit today